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Shell to Explore Xochicalco Field, Ups Investment to $345.8M

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Royal Dutch Shell plc (RDS.A - Free Report) recently secured permission from Mexico's National Hydrocarbons Commission to perform all activities in its exploration plan for the ultra-deepwater Xochicalco oilfield in the Gulf of Mexico.

Xochicalco field is located 123 miles offshore the city of Tampico in the northern province of Tamaulipas. Per the plan, Shell will initiate drilling of an extra well and a sidetrack. The field is situated in the Perdido fold belt, an area with no significant history of exploration activity nor any remote connection to any existing infrastructure, which make it technically challenging.

Shell will drill a well at depths of five miles and reach Wilcox formation with prospective reserves of as much as 562 million barrels of oil equivalent. Further, to better understand the reservoir, the company plans to drill more wells, thereby improving its investment in the play from $104 million in the original exploration plan, which was first approved last June, to $345.8 million.

About the Company

Headquartered in Netherlands, Shell is one of the largest integrated energy companies and is engaged in production, refining, distribution and marketing of oil and natural gas. The company has been an offshore pioneer in the Gulf of Mexico for more than 40 years and made some remarkable technological achievements in the design, construction and operation of world-class oil and gas producing assets. At present, the company operates nine deep water production hubs, several subsea production systems and one of the largest contracted drilling rig fleets in the gulf region.

Zacks Rank & Key Picks

Shell currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the same space are Murphy USA Inc. (MUSA - Free Report) , CNOOC Limited (CEO - Free Report) and SilverBow Resources Inc. (SBOW - Free Report) , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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